In re Carrier IQ, Inc., Consumer Privacy Litig.

78 F.Supp.3d 1051

In re Carrier IQ, Inc., Consumer Privacy Litigation.

No. C–12–md–2330 EMC

United States District Court, N.D. California.

Signed January 21, 2015

Rodger R. Cole, Tyler G. Newby, Jennifer J. Johnson, Molly R. Melcher, and Annasara G. Purcell, FENWICK & WEST LLP, counsel for Carrier IQ, Inc.

Ian Ballon, Jeffrey Scott, Lori Chang, Rebekah Guyon, GREENBERG TRAURIG, LLP, counsel for LG Electronics MobileComm, USA, Inc.Henry Weissmann, Rosemarie T. Ring, Jonathan H. Blavin, Bryan H. Heckenlively, MUNGER, TOLLES & OLSON, LLP, counsel for HTC America, Inc. and HTC Corporation

Simon J. Frankel and Katherine Gasztonyi, COVINGTON & BURLING LLP, counsel for Huawei Device USA, Inc.

Peter C. McCabe III, Norman K. Beck, Christopher J. Letkewicz, Krista M. Enns, WINSTON & STRAWN LLP, counsel for Motorola Mobility LLC

Wilson W. Lin, H.C. PARK & ASSOCIATES, PLC, counsel for Pantech Wireless, Inc.

Lance A. Etcheverry, S. Sheryl Leung, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, counsel for Samsung Electronics Co., Ltd. and Samsung Telecommunications America, LLC

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS SECOND CONSOLIDATED AMENDED COMPLAINT

(Docket No. 304)

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

Plaintiffs in this multidistrict litigation—eighteen (18) individuals from thirteen different states—have filed a second consolidated amended complaint (“SCAC” or “Complaint”) against Defendant Carrier IQ, Inc. and a number of manufacturers of mobile devices. The Complaint alleges that Defendants have violated the Federal Wiretap Act as well as a number of state's privacy and consumer protection statutes through the creation and use of Carrier IQ's software on Plaintiffs' mobile devices. Plaintiffs allege that Carrier IQ designed, and the Device Manufacturers Defendants embedded, the Carrier IQ Software on their mobile devices and, once embedded, this software surreptitiously intercepted personal data and communications and transmitted this data to Carrier IQ and its customers. Pending before the Court is Defendants'¹ joint motion to dismiss the SCAC in its entirety. For the reasons that follow, the Court GRANTS in part and DENIES in part Defendants' joint motion, and will afford Plaintiffs leave to file a third consolidated amended complaint.

II. FACTUAL & PROCEDURAL BACKGROUND

A. Plaintiffs

There are 18 plaintiffs in this action, from 13 different states. Below is a chart that identifies the Plaintiff, the state in which each resided during the relevant period, and which mobile device each Plaintiff had with the Carrier IQ Software installed:

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In describing each Plaintiff, the SCAC provides that “[u]pon information and belief, [the Plaintiff's] mobile device came with the Carrier IQ Software and implementing or porting software pre-installed. In addition to using his devices to make phone calls, [the Plaintiff] has used it for web browsing and text messaging, including accessing, inputting, and transmitting personal, private, confidential, and sensitive information. [The Plaintiff] would not have purchased his mobile device had he known that the Carrier IQ Software and related implementing or porting software was installed and operating on his device, and taxing his device's battery, processor, and memory, as alleged herein.” See SCAC ¶¶ 8–25.

B. Defendants

The remaining defendants in this action are a number of mobile device manufacturers. Plaintiffs allege that Carrier IQ is the “designer, author, programmer, and vendor” of the IQ Agent software and provided the mobile device manufacturers the “guide or template” needed for the “related implementing or porting software known as the CIQ Interface.” Id. ¶ 26. The IQ Agent and CIQ Interface software forms the basis of Plaintiffs' claims, as described infra .

The remaining Defendants are: (1) HTC America, Inc. and HTC Corporation (collectively “HTC”); (2) Huawei Device USA, Inc. (“Huawei”); (3) LG Electronics MobileComm U.S.A., Inc. and LG Electronics, Inc. (collectively “LG”); (4) Motorola Mobility LLC (“Motorola”); (5) Pantech Wireless, Inc. (“Pantech”); (6) Samsung Telecommunications America, Inc. and Samsung Electronics Co., Ltd. (collectively “Samsung”). Each Defendant is alleged to have installed the Carrier IQ Software and CIQ Interface software on at least some of their mobile device models.

C. Asserted Causes of Action

The SCAC alleges five causes of action:

• Count 1: Violation of the Federal Wiretap Act (18 U.S.C. § 2551)

• Count 2: Violation of State Privacy Laws: Plaintiffs assert their claims on behalf of all residents of the United States under Cal.Penal Code § 502 and on behalf of citizens of the following 35 states under those states' respective privacy laws: Arizona, California, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

• Count 3: Violation of State Consumer Protection Acts: Asserted on behalf of residents of the following 21 states under those states' respective consumer protection statutes: Arkansas, California, Connecticut, Delaware, Florida, Hawaii, Kansas, Maryland, Michigan, Missouri, Nevada, New Hampshire, New Jersey, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Vermont, Washington, and West Virginia.

• Count 4: Violation of the Magnuson–Moss Warranty Act (15 U.S.C. § 2301 –2312 ) : Asserted on behalf of the residents of the following 34 states (and the District of Columbia): Alaska, Arkansas, California, Colorado, Delaware, District of Columbia, Hawaii, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Virginia, Washington, West Virginia, and Wyoming.

• Count 5: Violation of the Implied Warranty of Merchantability: asserted on behalf of residents of the states enumerated under Count 4.

D. Carrier IQ Software Background

Carrier IQ “designed, authored, programmed, and caused the installation and activation of the Carrier IQ Software, including the so-called IQ Agent, on the devices at issue in this case.” Id. ¶ 62. It also “designed, authored, and provided guides to the Device Manufacturers for designing, authoring, programming, installing, and activating the CIQ Interface in deployments” through the “embedded” method of installation. Id.

Carrier IQ represents that its software is a “network diagnostics tool” for cell phone service providers. Id. ¶ 40. It is alleged that in reality, the software collects, and transfers, sensitive personal data off of a user's mobile device. See id. ¶¶ 1–2. Specifically, the CIQ Interface software is alleged to be a “wrapping or porting layer of code designed to see recognize and intercept a host of data and content, including SMS text message content and URLs containing search terms, user names, and passwords ... and to send that material down to the IQ Agent further processing and possible transmittals.” Id. ¶ 63. The SCAC alleges that the Device Manufacturers “design and program” the CIQ Interface (with Carrier IQ's aid) and then install the CIQ Interface and IQ Agent software on their mobile devices. Id. Once installed, the software “operates in the background,” such that the typical user has no idea that it is running and cannot turn it off. Id. ¶ 64.⁴ Users are never given the choice of opting into or out of the Carrier IQ Software's functionality. Id. Because it is always running, the Plaintiffs allege that it “taxes the device's battery power, processor functions, and system memory.” Id.

Plaintiffs allege that the data intercepted by the Carrier IQ Software includes the following: (1) URLs (including those which contain query strings with embedded information such as search terms, user names, passwords, and GPS-based geo-location information); (2) GPS-location information; (3) SMS text messages; (4) telephone numbers dialed and received; (5) the user's keypad presses/keystrokes; and (6) application purchases and uses. Id. ¶ 65. This information is intercepted as part of the Carrier IQ Software's “calls” on the device operating system for “metrics.” Id. It then stores the information in the mobile device's RAM memory on a rolling basis. Id.

The Carrier IQ Software also has a feature referred to as “Profiles.” Via Profiles, Carrier IQ customers (who are typically wireless carriers, but can also include device manufacturers) will specify which data they want from the above described “metrics.” Id. ¶ 68. At designated times (or as requested), the Profile-specified data would then be transmitted from the mobile device to the requesting customer (the wireless carriers or device manufacturers). Id.

The SCAC quotes from a number of letters which the various Device Manufacturers sent to Senator Al Franken in response to his inquiries regarding the Carrier IQ Software. These letters provide a glimpse into the potential scope of the Carrier IQ Software deployment. AT & T stated that Carrier IQ's Software was installed on approximately “900,000 devices, with about 575,000 of those collecting and reporting wireless and service performance information to AT & T.” Id. ¶ 53. Sprint indicated that there were “26 million active Sprint devices that have Carrier IQ Software Installed” and stated that Sprint queried information from a fraction of those (c. 1.3 million) at any given time for diagnostic needs and that a 30,000 device subset of this 1.3 million were used for “research specific problems.” Id. ¶ 54. T–Mobile stated that there were “approximately 450,000 T–Mobile customers [that] use...